Rubber output up, consumption lags

The production of natural rubber registered a an increase of 10.94 per cent jump between April and October, compared with output in the same period last year, according to the Rubber Board statistics. Natural rubber production rose 20 per cent in September to 60,000 tonne on year-on-year basis. In October, production went up 15.4 per cent compared with the same month last year.

If this trend continues, production of rubber during this financial year will reach the anticipated 654,000 tonne, the Rubber Board study hoped.

But this production increase notwithstanding, a shortfall in the northeast monsoon rains remains a great concern. Industry players are of the view that the rain shortfall may cause decline in production of natural rubber also. The impact, they say, will be visible from January onwards.

While production increased in October, consumption of natural rubber in the country grew only 4 per cent to 86,000 tonne, the statistics shows. Production and consumption figures stood at 52,000 tonne and 82,650 tonne, respectively, in the year-ago month. Rubber consumption rose 5 per cent to 604,930 tonne in the first seven months of this financial year from 5,73,910 tonne in the year-ago period. During the same time, rubber imports went up 3 per cent to 44,520 tonne in October from 43,276 tonne in the same month last year, while exports increased to 125 tonne from 113 tonne during the period under review.

Market analysts felt that India’s rubber import story may not be the same any more. So far, domestic prices used to be much higher, which in turn would encourage industries to import latex in large quantities or volume. That had been the practice for so long. But now one gets to see a complete reversal of the trend.

The overseas price of rubber is Rs 10 per kg costlier than Indian prices for the past one week. With duties the import cost comes to Rs 170 per kg whereas the domestic rate is Rs 130 per kg.

According to sector analysts and traders, the base effect is coming into play and thus the real increase in production is yet to be felt in the market.

Over and above this, there are disruptions in arrivals of new stock due to the recent demonetisation move. So availability of rubber continues to be a concern even though production has gone up.

Analysts pointed out that there might be a 30-40 per cent drop in tyre sales in the country, thanks to demonetisation. And that, in turn, may slow the sector. Besides, the increase in imports during April-October is also affecting the growers, although cheap domestic prices of the commodity, as projected, may be good for growers after some time.

According to Geofin Comtrade Research, last week in the Indian market, rubber stayed steady to negative. In the physical market, RSS4 grade rubber was quoted around Rs 129 a kg. But on NMCE it inched down, falling more than one per cent. Even as the underlying sentiments stayed positive, weakness seen in the major overseas market probably weighed. A mixed trend is being witnessed in the major overseas rubber market as the last week came to an end, Geofin Comtrade Research said.

The production of natural rubber registered a an increase of 10.94 per cent jump between April and October, compared with output in the same period last year, according to the Rubber Board statistics. Natural rubber production rose 20 per cent in September to 60,000 tonne on year-on-year basis. In October, production went up 15.4 per cent compared with the same month last year.

If this trend continues, production of rubber during this financial year will reach the anticipated 654,000 tonne, the Rubber Board study hoped.

But this production increase notwithstanding, a shortfall in the northeast monsoon rains remains a great concern. Industry players are of the view that the rain shortfall may cause decline in production of natural rubber also. The impact, they say, will be visible from January onwards.

While production increased in October, consumption of natural rubber in the country grew only 4 per cent to 86,000 tonne, the statistics shows. Production and consumption figures stood at 52,000 tonne and 82,650 tonne, respectively, in the year-ago month. Rubber consumption rose 5 per cent to 604,930 tonne in the first seven months of this financial year from 5,73,910 tonne in the year-ago period. During the same time, rubber imports went up 3 per cent to 44,520 tonne in October from 43,276 tonne in the same month last year, while exports increased to 125 tonne from 113 tonne during the period under review.

Market analysts felt that India’s rubber import story may not be the same any more. So far, domestic prices used to be much higher, which in turn would encourage industries to import latex in large quantities or volume. That had been the practice for so long. But now one gets to see a complete reversal of the trend.

The overseas price of rubber is Rs 10 per kg costlier than Indian prices for the past one week. With duties the import cost comes to Rs 170 per kg whereas the domestic rate is Rs 130 per kg.

According to sector analysts and traders, the base effect is coming into play and thus the real increase in production is yet to be felt in the market.

Over and above this, there are disruptions in arrivals of new stock due to the recent demonetisation move. So availability of rubber continues to be a concern even though production has gone up.

Analysts pointed out that there might be a 30-40 per cent drop in tyre sales in the country, thanks to demonetisation. And that, in turn, may slow the sector. Besides, the increase in imports during April-October is also affecting the growers, although cheap domestic prices of the commodity, as projected, may be good for growers after some time.

According to Geofin Comtrade Research, last week in the Indian market, rubber stayed steady to negative. In the physical market, RSS4 grade rubber was quoted around Rs 129 a kg. But on NMCE it inched down, falling more than one per cent. Even as the underlying sentiments stayed positive, weakness seen in the major overseas market probably weighed. A mixed trend is being witnessed in the major overseas rubber market as the last week came to an end, Geofin Comtrade Research said.